Freud's "Economic Hypothesis": From Homo Oeconomicus to Homo Sexualis

In his paper on the “Unconscious,” Sigmund Freud explicitly delineated the three meta-psychological hypotheses underpinning psychoanalysis; the topographic (which posited the existence of separate psychic “spaces” for the conscious, preconscious, and unconscious), the dynamic (which outlined the mechanism of repression), and the economic. While there are numerous works dealing with the first two principles, the third has been comparatively neglected. In part the very ubiquitousness of the “economic” hypothesis has made it almost too obvious to be discussed. ¹ Moreover, the idea of a “psychic economy” may appear too much a remnant of Freud’s earlier neurological work to interest scholars committed to keeping psychoanalysis separate from its medical origins. Nevertheless, the centrality of the “economic hypothesis” in Freud’s work should make it of interest to historians. What, they may well ask, did Freud actually mean by the term “economic,” and how was his use of the term related to economics as economists knew it? The central thesis of this paper is that Freud’s use of the term “economic” implied that his new psychology was somehow analogous to the earlier science of political economy, precisely because he had extended to the private the quantitative approach already employed to analyze the public sphere.

1. The Neurological Origins of the “Economic” Hypothesis

On May 25, 1895, Sigmund Freud wrote to his friend Wilhelm Fliess that his intention was to view psychology from a “quantitative” perspective, thus creating “a sort of economics of nerve force” (Freud 1985, 129). This quantitative conception was first worked out in his abortive Project for a Scientific Psychology, which attempted to explain psychic states solely on the basis of neurology (Freud 1950 [1895], 334 n3). Even after Freud abandoned neurology completely and devoted the rest of his life to psychology, he continued to speak in terms of the “economic” or “quantitative” forces underpinning psychoanalytic thought. Freud’s work was thus full of the language of political economy. Psychic processes, he proclaimed, should be evaluated in terms of “gain” and “loss”; hence the gain from nervous illness [Krankheitsgewinn] which offset the loss generated by a painful memory. In The Interpretation of Dreams, the dreaming process itself was understood as a kind of work [Traumarbeit] during which dreamers behaved like entrepreneurs who drew upon the day’s residue of energy to bankroll their nightly expenditure (Freud 1900, 561). Joking, like dreaming, was governed by a “tendency to economize” [Tendenz zur Esparnis] which helped explain why both processes packed separate memories together in a more economical use of psychic resources (Freud 1905, 44). The Freudian “libido” could be “impoverished” or “enriched.” A person under stress might have no mental energy left for everyday tasks, just like “a speculator whose money has been tied up in his various enterprises” might be unable to meet his payroll (Freud 1926, 90). Energy directed toward objects, whether sexual or nutritional, was also subject to “economic” considerations. Organisms always economized, Freud believed, even when they appeared not to do so; hence his dictum that “neurotic unpleasure” [Unlust] was really “pleasure that cannot be felt as such” on a conscious level (Freud 1920, 11).

Freud’s idea of a “psychic economy” was no mere metaphor, but a fundamental set of axioms about the function of individuals and the world in which they lived. To understand why this is so, we need to remember that Freud began as a neurophysiologist, only going into medicine in order to secure an income large enough to allow him to marry and start a family. During this period, he came under the influence of both Charles Darwin and Gustave Fechner, drinking deeply from the wellspring of scientistic materialism while he worked in the laboratory of Ernst Wilhelm von Brücke. According to Ernest Jones, his most celebrated biographer, “Freud came from his early training deeply imbued with the belief in the universality of natural law,” (Jones 1953, 365) including the notion that neurological phenomena obeyed the constraints of a conserved field. While this research background permitted Freud to specialize in the treatment of nervous diseases, he had no intention of exploring...